The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.

The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.

The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.

Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).
Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #05BANGKOK5317.

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 04 BANGKOK 005317
SIPDIS
SENSITIVE
DEPT FOR EAP/BCLTV, EB, AND OES/PCI
STATE PLEASE PASS TO USTR
ENERGY FOR IN AND PI; COMMERCE FOR JKELLY
E.O. 12958, AS AMENDED: N/A
TAGS: ECINECONECPSELABEINVENRGEPETKCORKPRVSENVSOCITHEPWR
SUBJECT: EASTERN SEABOARD WATER SHORTAGE HIGHLIGHTS
VULNERABILITY OF THAILAND'S ECONOMY
REF: N/A
-- SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION
¶1. (SBU) SUMMARY: A water shortage in the industrial areas
along Thailand's Eastern Seaboard raises questions about the
management of the nation's water resources with important
implications for the further development of Thailand's most
important industrial zone. A concurrence of two dry years has
led to a critical shortage of water at Map Ta Phut Industrial
Estate in Rayong Province, the eighth largest petrochemicals
complex in the world. Other areas, including Pattaya City,
one of the country's most important tourist destination, have
also experienced water shortages. The Royal Thai Government
is implementing various short- and medium-term solutions to
increase supply. Questions raised by these measures and the
absence of a more comprehensive effort to manage the nation's
water resources indicate that Thailand's Eastern Seaboard will
continue to confront the prospect of water shortages, and that
issues concerning water supply will require more attention on
the part industry in the region in the future. The relatively
poor performance in meeting such a pressing problem also calls
into question the ability of the RTG to manage the numerous
large infrastructure projects it has planned over the next
five years. End Summary.
THE WATER SHORTAGE IN THAILAND'S EASTERN SEABOARD
--------------------------------------------- ----
¶2. (U) A water shortage in the coastal plains of Chonburi,
Rayong, Chanthaburi, and Trat provinces (collectively known as
the Eastern Seaboard) has the potential to disrupt current
industrial activity and long-term economic development of the
region. Home to the country's principal oil refineries,
petrochemical industry, automotive industry, and various other
major manufacturers as well as important centers of tourism,
the Eastern Seaboard has emerged in recent years as the single-
most important economic zone in Thailand outside of Bangkok.
The region provides 16 percent of total manufacturing output
and 22 percent of energy output.
¶3. (U) The coastal areas of the Eastern Seaboard,
particularly in Rayong Province, depend heavily upon inland
reservoirs to supply the water they need. Historically, water
levels in these reservoirs drop during the dry season and
refill after the seasonal rains arrive, usually from July to
September. Recovery after the 2004 rainy season was far below
the levels of previous years. 2005 has been an unusually dry
year, a problem complicated by the fact that frequent
downpours in the Eastern hills drains away into streams and
rivers far from Nong Plalai and Dok Krai reservoirs, which
together comprise the main source of water for Rayong and
especially the Map Ta Phut Industrial Estate located there.
¶4. (U) The water shortage has also begun to affect centers of
tourism in the region, particularly Pattaya City in Chonburi
Province. Mr. Charnyuth Hentrakul, a parliamentarian from
Chonburi and member of the governing Thai Rak Thai Party, has
publicly warned that water shortages may hit the tourism
industry if the problem persists. Reported tap water
production has fallen from 120,000 cubic meters per day to
69,000 cubic meters per day due to shortages of raw water.
According to one estimate, hotels in Pattaya alone need 60,000
cu/m of water per day. Short-term measures to divert water
from area rivers to reservoirs are in progress but are not
complete. Hotel operators have resorted to other sources of
supply, including buying water trucked in from other
provinces. There has been an increase in tourist complaints
about poor water quality at hotels supplied from underground
water sources, and local residents have experienced
interruptions in water supply. One hotel operator said that,
as a result water costs have jumped from Baht 20,000 (USD 485)
per month to Baht 200,000 (USD 4,850) per month.
THE CRISIS AT MAP TA PHUT INDUSTRIAL ESTATE
-------------------------------------------
¶5. (U) While the shortage has affected industrial areas along
the Eastern Seaboard, the problem is most acute at Map Ta
Phut, which is facing its most severe water crisis in more
than twenty years. Owing to the extensive growth of industry
both at the estate and in the region in the intervening years,
the current crisis has the potential to cause much greater
disruption to the Thai economy than previous droughts.
¶6. (U) Developed by the state-run Industrial Estate Authority
of Thailand (IEAT) in 1982, the 7,430-rai (almost 3,000-acre)
Map Ta Phut Industrial Estate houses 60 plants, including 32
petrochemical factories, 10 power plants, eight iron and metal
production plants, seven chemical fertilizer factories, two
plants for industrial services, and one oil refinery. Map Ta
Phut has developed into the eighth largest petrochemicals site
in the world. The total investment cost was Baht 549.3
billion (USD 13.32 billion). At present, the estate consumes
between 400,000 and 500,000 cubic meters of water per day. By
the final week of July, the Dok Krai and Nong Plalai
reservoirs held less than 30 million cubic meters, or about
enough to feed it until mid-August in the absence of rain. As
of mid-August the level of the two reservoirs has reportedly
fallen to approximately 10 million cubic meters, or enough to
meet demand for 20 days in the absence of rain. Rain is
expected in August and September. Other supplies of water in
the province are also low, highlighting general concern among
the population of Rayong about the water shortage. The Prasae
River dam about 50 kilometers east of Rayong city can hold up
to 250 million cubic meters of water, but as of the end of
July it held only 40 million cu/m, or 16 percent of its total
capacity, for example.
¶7. (SBU) Companies operating in Map Ta Phut have been making
contingency plans. These include reducing output to curb
usage, stockpiling reserves, and procurement from other
sources of supply such as having water trucked in. Reportedly
having little confidence in the government's ability to
relieve the water shortage, major manufacturers at Map Ta Phut
initially made plans to cooperate in cutting output so as to
reduce water consumption following an emergency meeting in
June convened by Mr. Peravatana Rungraungsri, director of Map
Ta Phut Industrial Estate. At that meeting Mr. Peravatana
suggested either cutting water consumption by 40 percent or
calling an advance factory shutdown for maintenance work to
cope with the drought. Local residents and environmentalist
groups have gone further, calling for long-term limits on the
annual growth of the Eastern Seaboard industrial hub as the
solution to the problem.
¶8. (SBU) The public warning that Map Ta Phut was running out
of water has prompted concern in investment circles and at the
highest levels of the Royal Thai Government (RTG). Securities
analysts have voiced concern not only about the water shortage
itself, but about the government's lack of transparency with
respect to the main facts of the problem and the
countermeasures to be implemented. In one analyst's worst-
case scenario (of several scenarios outlined), Map Ta Phut
runs out of water at the end of August.
¶9. (U) Recognizing the potential consequences of the water
shortage for Thailand's business confidence and reputation in
the eyes of foreign investors, Deputy Prime Ministers Phinij
Jarusombat and Somkid Jatusipatak brushed aside calls for any
cut in production at Map Ta Phut and pressed for alternative
immediate solutions to get through the dry season. Prime
Minister Thaksin Shinawatra has publicly downplayed the
crisis, and has pledged that the government will ensure
sufficient supply to Map Ta Phut. During a visit to the
region, during which he attended ceremonies celebrating the
expansion of PTT Plc's fifth gas separation plant and Thai
Olefins Plc's production unit at Map Ta Phut, he announced,
"You can use as much water as you want in order to promote the
country's economic growth. The government will try its best to
seek additional water for the industrial sector. However, you
must use the resources efficiently," he said.
STOP-GAP MEASURES
-----------------
¶10. (SBU) The RTG's approach to obtaining alternate sources
of supply for Map Ta Phut include digging artesian wells,
artificial rain, diverting water from rivers in other eastern
provinces and installation of desalination plants along the
coast. Firms with operations at Map Ta Phut told the Embassy
that while they hope the government's measures will achieve
results, the government's record to date was mixed. They
added that the government's initial disregard of the problem
inhibited productive discussion of both the problem itself as
well as potential solutions in the near-term, and raised
questions about overall management of the region's water
resources long-term. Companies in the affected area have
indicated that artesian wells have had limited success,
producing about 40,000 cu/m per day, 25 percent of the
anticipated amount needed. The geology of the region is
reportedly not good for artesian wells. Cloud-seeding has
likewise brought unspecified but limited results. Until early
August, there was little concerted movement on more extensive
projects. Some companies have reportedly advanced their own
funds toward the construction of pipelines, for example, on
the understanding that government funding is forthcoming.
¶11. (U) On August 2, the Cabinet approved several ambitious
projects for the Eastern Seaboard expected to cost
approximately Baht 48 billion (USD 1.16 billion), with an
additional Baht 2.7 billion (USD 65.49 million) to be spent on
13 immediate pipeline projects to alleviate the situation. In
all instances, there has been significant local opposition to
plans for siphoning off water resources from predominantly
agricultural areas to industry. The government is also
attempting to supply Chonburi with water from sources other
than those in Rayong, such as the Chao Praya and Bang Pakong
Rivers.
¶12. (U) In the short-term, maintaining sufficient supply of
water depends upon successful completion of two pipelines from
the Rayong River, each carrying 100,000 cu/m of water per day.
The first pipeline was completed on August 15 and is supplying
the 100,000 cu/m as projected. The second is due to go live
on August 22. Without the construction of dykes or other
barriers to alter the flow of the river, however, these
pipelines afford only temporary relief from the shortage. The
Royal Irrigation Department plans to build a four-meter-high
earthen dyke across the mouth of the Rayong river to retain
water, which it envisions will be washed away once the flood
season begins. In the rush to implement this year's emergency
measures, the government is allowing these and other projects
to go forward without performing environmental impact studies,
which has raised concern among environmentalists.
Additionally, local villagers oppose these projects.
A LONG-TERM PROBLEM
-------------------
¶13. (SBU) While the present crisis in the Eastern Seaboard was
precipitated by two concurrent dry years, the outlook going
forward shows that water resource management has arrived as a
long-term problem for Thailand. Eastern Water Resources
Development and management Plc, the region's supplier, is
warning that the reservoirs have enough supply for the next
150 days only. Experts point to decreased replenishment of the
reservoirs in recent years owing to reduced catchment areas,
for example. Neither the RTG nor industry regards the
reservoirs, even if replenished, as a sufficient source of
supply in the future. RTG initiatives to increase water
supply have focused mostly on using water from rivers in the
region. During a visit to Rayong on August 15, Industry
Minister Suriya Jungrungreangkit also announced that the RTG
will provide incentives for businesses that undertake
desalinization projects.
¶14. (U) Given the priority the RTG has placed on developing
the industry of the Eastern Seaboard region for over two
decades, the question of how the crisis came to happen has
been the subject of much discussion and recrimination. Deputy
Prime Minister Somkid put the question directly, "We attracted
billions in investment to these areas and then we
irresponsibly allowed the water level to fall to the lowest
level. Who would be responsible for this?" The Deputy Prime
Minister is reportedly considering setting up an inquiry into
the water crisis. This question is of particular concern at
present in view of the government's plan for massive
investment in the so-called third phase of development of the
local petrochemical industry over the next ten years.
¶15. (U) The absence of a clear government policy on water
management has flowed in part from the division of
responsibility among at least eight different entities. IEAT
is the state enterprise under the jurisdiction of the Ministry
of Industry responsible for administering Map Ta Phut, among
other industrial estates. The Royal Irrigation Department has
responsibility for management of the water resources of the
region. East Water Resources Development and Management Plc
(East Water), a private company, is the sole supplier of water
for industrial use in the Eastern Seaboard area. The company
pumps 500,000 cubic meters of raw water to Map Ta Phut through
a pipeline connecting Rayong's two major reservoirs, Nong Pla
Lai and Dok Krai each day. Within Map Ta Phut, each company
has its own plan for managing water usage.
¶16. (SBU) Academic and policy think tanks have emphasized the
failure of successive governments to adopt comprehensive
measures for water management on a regional basis. They argue
that the RTG has not incorporated consumption data from
agricultural, industrial, and urban sectors, or considered
bringing market mechanisms to bear on the problem. Policy to
the extent is has been coordinated has focused almost wholly
on increasing supply (but without taking into account the
increasing demand). Thailand was, until recently, a nation
with a water surplus, with only a small areas affected by
drought. In recent years, water shortages have affected ever-
widening areas in various parts of the country. Thailand's
abundant average annual rainfall of 1,700 millimeters,
suggests that the root cause of the problem is a failure on
the part of the government to efficiently manage water
resources and to educate the public about the need to conserve
water.
¶17. (SBU) COMMENT: The current government's ambitious plans
to fix the problem show its willingness to bring significant
resources to bear in devising a solution, but serious
questions about the management of water resources generally in
Thailand's most important industrial area going forward
remain. Embassy business contacts tell us the most pressing
immediate-term issue is the absence of cooperation between
industry, government, and local communities. At Map Ta Phut
specifically, no authority exists to coordinate any decision
to shut down or to restart operations if a shutdown is
implemented. Companies have also voiced concern about the
absence of transparency in the approval of the projects to
increase supply, and decisions regarding awarding of
government contracts in particular. The lack of clarity from
the government on the facts of the problem, for example, has
led some observers to ask who stands to gain from the crisis.
Longer-term, although PTT and other firms such as Siam Cement
have plans to apply state-of-the-art technology to reduce
water usage in newly built plants, neither the government's
plans for the current year's shortage, nor its longer-term
plans for managing water resources demonstrate a willingness
to introduce market mechanisms such as progressive pricing to
encourage conservation. The government's expediting certain
projects without performing feasibility and environmental
impact studies and indications that proposed projects may be
less successful than expected or lead to unintended
consequences are likely to bring criticism of the projects on
the basis of effectiveness and transparency. Without
solutions to current and forthcoming problems concerning water
supply, the future economic development of Thailand's Eastern
Seaboard will be at risk with potential consequences for the
country as a regional industrial center. This problem is
indicative of the lack of investment in infrastructure since
the 1997 economic crisis, a problem Prime Minister Thaksin is
now attempting to address with a multi-billion dollar
`megaprojects' program expected to begin next year. The
questionable performance in resolving the Eastern Seaboard
water issue forces us to question the RTG's ability to
properly manage a series of enormous projects simultaneously.
End comment.
Boyce